China's Baosteel agreed to a 96.5% hike in the cost of iron ore from Rio Tinto yesterday, which falls on the heels of a 65% rate hike by Brazil's Vale to other Chinese steel mills.

Mining major BHP Billiton has indicated that will drop annually priced iron ore contracts in favor of an external reference index-correlated pricing system after its current agreements expire. The news was released Tuesday in London. China has already indicated that it may boycott BHP iron ore purchases as a result.

Steel billet jumped 2.5% on the LME to a record-setting $1,250 per tonne Thursday.

While steel mills are shuddering over the rise in iron ore costs, Canadian junior exploration mining company, Dorex Minerals, Inc., couldn't be happier after revealing earlier this week that its drilling program located within the "Iron Belt" at the south end of the Atacama Desert, Chile showed an average iron ore value of 5.2% across a 92.6 meter mineralization area. Dorex's President, Peter Walton, said, "We're encouraged by the results."

Walton noted that while only seven drill holes were made, the consistent findings were bullish enough to warrant further exploration, though Dorex may find new interest in participation should iron ore prices continue to shore up steel's record setting price on the London Metals Exchange.

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